8 December 2016
Transcript - #2016181, 2016

Interview with Kieran Gilbert, Sky News

SUBJECTS: September Quarter National Accounts; Turnbull Government’s record $50 billion infrastructure investment; maintaining Australia’s energy competitiveness; reducing pressure on energy prices

KIERAN GILBERT:

[Audio begins]…criticism from Labor about your big economic plan for the new year Treasurer, and that is, that it won’t have any impact for two decades for company tax cuts?

TREASURER:

The Labor Party just don’t know which way is up on this issue. Chris Bowen said reducing the corporate tax rate was a Labor thing. He has been on the record supporting company tax cuts since he was out of short pants, and the same with Bill Shorten, but when it comes to actually getting on and voting for it and doing it so businesses can actually have the head room they need in the tax system to go and invest more, give their staff more hours, go and capture those extra markets and grow their businesses, well they run for the hills. So Labor has no credibility on this issue, they simply are running a political game on this of search and destroy, whether it’s on the Budget or on economic policy, because their political plan is they go well, if we burn the house down it will be easier to try and get into it. Now, I just don’t think that’s what Australia needs.

KIERAN GILBERT:

I want to ask you about this idea of good debt versus bad debt in the wake of the GDP figures yesterday. There’s an argument made by many that the Government needs to step in with more infrastructure spending. I know that you made the case for a more nuanced discussion around debt. Can you make that case, not just to the Australian people, but to the ratings agencies and invest more in infrastructure into the new year?

TREASURER:

It is important to make this case and we are investing in infrastructure. We’ve got a $50 billion national infrastructure plan that we’re rolling out and that is on top of the defence industry procurement plan which is also an enormous part of that strategic investment we’re making in our capabilities. This isn’t about economic stimulus. That’s what the Labor Party did. They gave money to dead people and thought that was going to grow the economy. That was a nonsense. What we’re doing is focusing on strategic investments, whether it’s the Inland Rail project, or water infrastructure, or it’s on airport infrastructure and the roads and rail lines and these sorts of things that support these types of important strategic investments. Good debt is when you’re investing in things that actually build that capacity. Bad debt is what is happening with what the Labor Party is proposing; more recurrent spending, spending more and more tax payer dollars and then having to borrow more and more to pay for that. Now, that is not the way to build growth, and the growth that supports jobs and wages and more hours. One of the positive things I’ve got to say Kieran, about these national accounts yesterday, was the 1.7 per cent growth through the year on real net disposable income. We’ve had now two successive growths in that, by quarter, and that is welcome. In addition to that we saw an improvement in private companies’ profits. That was welcome. But the thing that is the issue, is 12 consecutive quarters of negative business investment. That’s what we have to fix, and that’s what our tax plan fixes.

KIERAN GILBERT:

You talk about the need to get investment out of its cage is the phrase that you describe. The reason I want to focus again on the infrastructure issue is, can you leverage more investment via a public/private partnership for example in infrastructure? Can you get that investment out of its cage via this infrastructure focus if you enhance that into 2017?

TREASURER:

Of course. All of these things are important and all of these things we’re seeking to do even now with the significant commitments that we already have out there. The extent to which these can be pursued successfully in the future then the Government is always alive to those options going forward. I mean, whether it’s programs like the Northern Australia Infrastructure Fund, whether it’s the city deals that we’re putting together whether it’s in places like Townsville, or elsewhere, we’re investing in that infrastructure to bring in more private investment in that infrastructure and the businesses and other things that support that. It’s all about investment to drive the growth, and without that growth you can’t have the revenues that…

[Broadcast interruption]

KIERAN GILBERT:

We’ve got an issue with our line there to the Commonwealth Parliamentary Offices in Sydney we’ll try and get that fixed. Treasurer in relation to those tax cuts, if we go back to where we started, Nick Xenophon says he’s happy to back turnovers of up to $10 million a year, could you get the best of both worlds here where you get a bit of a boost to the economy with the first phase of cuts up to $10 million turnover, without having the hit to the Budget of the big end of town tax cuts which potentially that could assist you in terms of maintaining the AAA rating?

TREASURER:

Those measures for the larger businesses don’t kick in for about eight years. So they don’t have an impact on the Budget or forward estimates, and the tax cap in the medium term projections also addresses the funding of those longer term issues. I welcome Nick’s support for as far as he has come. But when businesses are looking at where they’re going to invest, they do look out over that ten year horizon, and the ability to map that out over ten years as the United Kingdom has, as the United States are about to, we don’t want to be stranded here. We don’t want capital either repatriating back to the UK or the United States and leaving us in a position of great lack of competitively on these things. The Labor Party says we should match the backpacker rate in New Zealand but then bizarrely says we should have a higher company tax rate. How does that make sense when they say that they think company tax rates should be lower, and it’s a Labor thing? It is very confusing and Kieran we cannot let the Labor Party off the hook here. The Coalition supported the Hawke/Keating reforms which started the 25 years of consecutive growth. The Howard/Costello Government doubled down on that, went even further. We remain true to those economic principals which have delivered 25 years of growth. Bill Shorten has done a runner on growth.

KIERAN GILBERT:

One of the things the energy sector wants is certainty ,like any part of the corporate world. But there doesn’t seems a lot of certainty right now on climate policy. The Financial Review reports this morning that Alan Finkel the chief scientist is going to suggest that the Government adopt this emissions intensity scheme for the energy sector. This is contrary to what the Government’s ruled out this week. Professor Finkle is going to argue apparently to COAG that this will lead to cheaper prices and better energy security. Isn’t that what you want?

TREASURER:

You’re speculating on a speculative report that hasn’t been handed down, so I don’t intend to get into that. But what I do know is that the Government has never been contemplating issues of ETS’ or carbon taxes. The review that was announced by the Environment and Energy Minister was a housekeeping review that has been part of our policy since the 2010 election. I think there’s been a bit of an overreaction to all of that. This was a very low level housekeeping review. But what is important is energy security. What is important is ensuring the supply of things like gas and ensuring that will give us more affordable energy prices for both businesses and for households. What you don’t want is the sort of mindless ideological 50 per cent renewable energy targets which are unachievable and are one of the primary, if not the primary, cause of what we’re seeing in some of the states.  We need that national energy market which the Minister Josh Frydenberg is working to achieve. That’s dealing with regulations around not just access to gas, but the movement of gas around the pipelines and getting better, more competitive regulations around that and that’s what he’s working. I think that’s very valuable work which will reduce the pressure on energy prices in this country.

KIERAN GILBERT:

Do you accept, just finally, that it looks, once again like the Prime Minister has capitulated to the conservative right on this issue given the events of the last few days?

TREASURER:

No that’s bunkum, that’s complete bunkum. As I just said, the Prime Minister and the Government has not been contemplating those measures. So this is a fabricated position that I think is being put to me. It never happened because it was never that in the first place, Kieran. I know the interest in trying to talk those things up but what has happened this year is we have passed legislation, more than $21 billion in Budget improvement measures and that’s a great message for me to be able to communicate to the ratings agencies. The ABCC, the ROC, the passing of superannuation measures which people said could never happen and would even bring down the Government. Well, all of those critics have been proven wrong by the delivery of the Turnbull Government since the last election.

KIERAN GILBERT:

Mr Morrison, Treasurer, appreciate your time as always, thanks for that.